1st lien HELOC or cash out refi

[Mike Rios]

Hey BP,

About to finish my first BRRRR but need some help deciding whether to do a first position HELOC or Cash out refi.

-Bought house free and clear for 190000

-Rehab was 100000

-Appraised for 345000 (275000 80% LT )

I'm getting offered a 2.99 introductory rate 80 LTV HELOC that adjusts every year with the prime. I'm also being offered a 3.5 80 LTV cash out refi

Isee the merits for both, HELOC is flexible and I can be cash flowing more right away and I can use it when I need it, but I'm scared of the adjustable rates

The cash out refi seems appealing because I can lock In the 3.5 rate (considered my primary) and I can cash flow close to 1k after expenses, but I don’t have any deals lined up.

Not sure if I'm going to use that lump sum to buy another Brrrr SFH or use it as a down payment for a bigger multi family

Goals are to net 100k a month in passive income and to grow my portfolio relatively fast. Any advice would be appreciated it!

[Brian G.]

@Mike Rios since it’s a longterm hold I would do a cash out refi and put fixed longterm debt on it as that’s best for a hold, especially with historically low interest rates. Helocs are best utilized for short term debt, ie for flips or medium term debt, ie BRRRRs prior to putting longterm debt on a property.